Tashkent, Uzbekistan (UzDaily.uz) — The Eurasian Development Bank (EDB) has presented a report titled “Energy Without Borders: The Architecture of Energy Connectivity in Central Asia”, arguing that the region’s energy potential is constrained not primarily by a lack of generating capacity but by insufficient system coordination and control.
The bank estimates that deeper regional integration could generate up to US$640 million in gross annual benefits. The report was prepared jointly with the UN Economic and Social Commission for Asia and the Pacific (ESCAP) and the Energy Coordination and Dispatch Centre, based in Tashkent.
Existing grids, but a lack of common rules
According to Arman Akhunbayev, head of the EDB’s Centre for Sectoral Analysis, the region’s power systems were originally designed to operate as an integrated whole. However, this technical foundation now needs to be complemented by modern market rules, accurate metering and transparent settlements.
Demir Kabylbayev, a senior analyst at the centre, noted that Central Asia already has physical electricity networks connecting its countries, unlike many other regions. “We have the networks; what matters is putting the rules in place,” he said.
Electricity operates in real time and cannot be stored in the same way as other goods or held up at a border. Coordinated operation therefore requires synchronisation, monitoring and trust among participants.
The interconnected power system includes Uzbekistan, Kyrgyzstan, Tajikistan and southern Kazakhstan. Turkmenistan and northeastern Afghanistan are connected through island-mode arrangements.
Regional electricity trade has increased fivefold from its 2010 low, reaching 12.1 billion kWh in 2024. However, it accounts for around 8.5% of consumption, approximately half the share recorded in the European Union.
Installed capacity and peak demand
At the time of the annual peak in 2024, the system had 36.4 GW of installed capacity, while available capacity stood at 28.8 GW. According to the report, around 6.6 GW was unavailable or restricted due to cold reserves at thermal power plants, hydrological and fuel constraints, and other factors.
At the same time, key transmission lines were operating at 102–123% of their permissible limits.
Countries in the region have announced plans to commission at least 62.8 GW of new generating capacity by 2035. The report's authors warn that without coordination, some new power plants could be underutilised, while areas facing shortages may remain without reliable supply.
Renewable energy integration presents a separate challenge. Under conservative estimates, Uzbekistan’s renewable energy capacity could reach 11.4 GW by 2028, with energy storage capacity at 4.3 GW. Curtailment of renewable generation could rise to 3.5 billion kWh.
Kabylbayev said these calculations were made in 2024 and that actual capacity targets were likely to be exceeded. Under the estimates, around one in every seven kWh of renewable electricity generated in 2028 could have to be curtailed. Regional integration would allow more of this electricity to be used across a wider area.
Potential economic benefits of cooperation
The EDB identifies four main sources of economic benefits: electricity trading, shared reserves, reduced renewable energy curtailment and lower losses from emergency situations.
Under the advanced integration scenario, the gross annual benefit is estimated at US$640 million. After costs are deducted, the net annual benefit is estimated at around US$120 million under partial and deeper integration scenarios, and approximately US$40 million under the advanced architecture scenario. These are annual estimates, not cumulative figures.
Kabylbayev clarified that the analysis was based on scenarios rather than hourly modelling. The estimates are intended as an initial assessment and should not be treated as a forecast.
“The greatest impact can be achieved without major construction, without even physical infrastructure,” he said, referring to digital metering, calculating available transmission capacity, coordinating operating regimes and establishing rules for accounting and settling deviations.
As an example, he cited KEGOC’s wide-area monitoring system, which made an additional 250 MW of transmission capacity available without new construction.
Akhunbayev said that savings could be as valuable as additional revenue because the priority was not to generate as many kilowatt-hours as possible, but to ensure reliable electricity supply.
If shared reserves allow a neighbouring country to avoid building a gas-fired power plant costing US$1 billion, that represents an economic benefit, he explained. In winter, a country receiving electricity from its neighbours could also avoid releasing water from reservoirs to generate power, preserving it for summer irrigation.
Water as a paid system service
The report proposes treating the hydropower flexibility provided by Kyrgyzstan and Tajikistan as a paid system service rather than a free reserve.
Kabylbayev said hydropower plants could provide almost the full range of grid services, but operating them in flexible modes accelerates equipment fatigue and can reduce its service life by roughly an order of magnitude.
“Hydropower plants are like a Swiss Army knife that can do almost everything. However, the main limiting factor remains water,” he said.
Developing a regional electricity market
The EDB proposes building a regional market in stages. The process would begin with bilateral transactions, commercial metering and rules for settling deviations, followed by a day-ahead market, a real-time market and system services. The final stage would involve a regional assessment of generation adequacy.
National system operators would retain control over domestic operating regimes, while the Energy Coordination and Dispatch Centre could serve as the regional coordinator and platform operator.
Asked what should be introduced first, Akhunbayev said the region should start with digital metering and market rules while addressing the most constrained sections of the power grid in parallel.
“Without an accurate meter and a clear contract, the market simply will not work,” he stressed. He described attempts to immediately replicate the European market model as premature for Central Asia.
Grid projects and financing
The report identifies several priority transmission projects, including the second 500 kV Shymkent–Tashkent Thermal Power Plant line, Crystal–Yulduz, Frunze–Kemin, Kemin–Almaty, Muruntau–Shymkent and Datka–Sughd.
Other priorities include a central automatic generation control system, automated commercial metering and secure communication channels.
Kabylbayev said grid projects often faced funding shortages because many transmission and distribution companies in the region were loss-making and unable to finance their own investment programmes.
One proposed solution is the Independent Transmission Project (ITP) model, under which a private investor builds and operates a transmission line, while planning and operational control remain with the system operator. The operator makes annual payments to the investor for network availability.
Around 120,000 km of high-voltage transmission lines have been built in Brazil under a similar model in recent years, with the average discount against the price cap reaching 28.4%.
In Kazakhstan, the EDB financed the 500 kV Batys Transit project with a US$30.5 million loan.
The report treats external links, including CASA-1000, connections with Russia and China, and the Trans-Caspian Corridor, as an extension of domestic modernisation rather than a substitute for it.
“You cannot become a reliable energy hub if you have not put your own house in order,” Kabylbayev said.
